Photo Credit: Getty Images
In a groundbreaking move, South Korean President Yoon Suk-yeol unveiled a record $19 billion support package aimed at bolstering the country’s crucial semiconductor industry. The announcement comes as the global demand for semiconductors continues to surge, and South Korea seeks to maintain its competitive edge in this critical sector.
President Yoon Suk-yeol revealed that approximately 17 trillion Korean won (approximately $15.8 billion) will be allocated to a comprehensive financial support program for chips through the Korea Development Bank. This program entails various aspects, including financial aid, infrastructure development, research and development, and support for small and medium-sized companies. The liquidity challenges arising from significant investments in facilities (such as new factories and line expansions) will be addressed through this initiative.
In addition to financial support, President Yoon announced an extension of tax benefits for chip investments. The goal is to boost employment and attract more talent to the semiconductor industry. South Korea recognizes that winning the semiconductor “war” depends on who can produce state-of-the-art chips with high information processing capabilities first. The government aims to ensure that South Korean companies remain competitive globally.
Furthermore, the support package includes the establishment of a “semiconductor ecosystem fund” worth 1 trillion Korean won (approximately $734 million). This fund will provide critical support to semiconductor companies and small to medium-sized enterprises linked to the industry. Despite being home to top memory chipmakers like Samsung Electronics and SK hynix, South Korea’s fabless market share remains in the 1% range. The ecosystem fund aims to address this gap and enhance competitiveness.
South Korea is also constructing a “mega chip cluster” just outside Seoul. This ambitious project is set to become the world’s largest semiconductor-making complex. The cluster’s establishment is expected to create millions of jobs and further solidify South Korea’s position in the semiconductor industry.
According to GlobalData, the overall AI market is projected to be worth $909 billion by 2030. The AI sector has grown at a compound annual growth rate (CAGR) of 35% between 2022 and 2030. Within the AI space, the GenAI segment is particularly promising. Revenues are expected to surge from $1.8 billion in 2022 to $33 billion in 2027 at an impressive CAGR of 80%. GenAI is poised to revolutionize various industries, including machine learning, computer vision, and autonomous robots.
South Korea’s strategic investment in its semiconductor industry underscores its determination to lead the way in cutting-edge technology. As the world increasingly relies on semiconductors, South Korea’s strategic moves are pivotal for both its economy and global innovation.
